Even Starbucks say that Instant coffee is better than Roast and Ground!

by chee Leng (on coffee makers)
(Singapore)

Via instant coffee

That coming from Starbucks a company that make its fortune from selling gourmet coffee is ironic. But, their ground coffee for Via instant coffee seems to indicate just that.

In their latest deal, Starbucks is so confident of their via instant coffee that they would change a packet of roast and ground coffee for anyone that is not satisfied with their Via instant coffee.

In a way, they are saying that Via is better than their R&G coffee, or instant is better, don't you agree?

We all know how hard Starbucks has been marketing its Via instant coffee, according to them, it has generated $135 million in global sales.

This should not come as a surprise. In US alone, they are distributed to more than 10 000 outlets, so sales have to be good.

My questions is with such heavy marketing and distribution (definitely with lucrative listing fees or marketing funding), is the margin still good?

The fact is, in the short term, Starbucks might not be making serious money from Via. But what they are looking at is market share.

The entire coffee sales from Starbucks is just 10% of Nescafe sales (Nescafe does more than 100 billion while Starbucks does about 10 billion, source Wikipedia).

So, if Starbucks would to erode just 10% of Nescafe market share, their entire sales volume would double and profit should be good too as higher volume for manufactured products means lower costs thus higher margins.

Now, you can see why even Starbucks have to agree that instant coffee is better than roast and ground right?